Short-Term Rental Insurance in AR: Is Your Airbnb Policy Actually Covering You?
Updated: 5 days ago
Renting your Arkansas home, cabin or rental property on Airbnb or VRBO can bring in good money. But many hosts assume their regular insurance covers guests. Often it doesn't, and they find out after a claim.
This guide explains where the gaps are, what Airbnb's AirCover does and doesn't do, and the ways to insure a short-term rental properly.
The gap: regular policies and short-term guests
Standard homeowners policies (HO-3) and many landlord policies (DP-3) are written for a home you live in or rent to a long-term tenant. Many of them exclude or limit coverage when the property is rented to short-term guests, or treat that rental as a business activity they didn't agree to cover.
If you list the property and don't tell your insurance company:
A claim involving a guest, such as an injury or a fire, may be denied.
The insurance company may cancel or refuse to renew the policy once it finds out.
In some cases, the insurer can argue the policy was based on wrong information from the start.
The fix starts with one step: tell your agent how the property is used.
What Airbnb's AirCover does and doesn't do
Airbnb's AirCover for Hosts has two main parts. Check Airbnb's current terms, because they change.
Host liability insurance (up to $1 million). This is real insurance, provided through a group policy. It can cover you if a guest is hurt or a guest's property is damaged and you're found legally responsible during an Airbnb stay.
Host damage protection (up to $3 million). Airbnb says this is not an insurance policy. It's a reimbursement program for certain guest damage, decided through Airbnb's own process.
Why it isn't enough on its own:
It only applies to stays booked through Airbnb. VRBO and direct bookings aren't covered.
It doesn't replace coverage for your building from fire, storms, hail or burst pipes when no guest caused it.
It doesn't cover your lost rental income while the property is being repaired.
It has exclusions and limits, and damage reimbursement depends on Airbnb's review.
Think of AirCover as an extra layer, not your main insurance.
Ways to insure a short-term rental
A homeowners or landlord policy with a short-term rental endorsement. Some insurance companies will add coverage for occasional short-term rentals if you disclose it. Best for a home you live in and rent now and then.
A dedicated short-term rental policy. Built for vacation rentals. It typically covers the building, contents, liability to guests, and loss of rental income.
A commercial policy. For hosts with several properties or a full-time rental business, often owned through an LLC.
Which one fits depends on how often you rent, whether you live there, how many properties you have, and what the insurance company will accept.
What good short-term rental coverage should include
The building and your contents, including furniture and supplies for guests
Liability if a guest is hurt or causes damage to others
Loss of rental income while the property can't be rented after a covered loss
Theft and vandalism by guests (some policies limit or exclude this, so ask)
Coverage for the rental platforms you use, not just Airbnb
Common exclusions to ask about: wear and tear, bed bugs and pests, mold, and damage you or your own pets cause.
Arkansas things to check
City rules. In Arkansas, short-term rental rules are mostly set locally. Many cities and counties have their own rules on permits, taxes and where short-term rentals are allowed. Check with your city before you list.
HOA and deed restrictions. Some neighborhoods restrict short-term rentals. Some insurance companies won't cover a rental that breaks those rules.
Weather. Arkansas properties face tornadoes, hail, wind and ice storms. Check your wind and hail deductible, which may be a percentage of the building's value rather than a flat amount.
Lake and remote properties. Docks, boats, hot tubs and long distances from a fire station can affect what insurance companies will offer and the price.
FAQ
I rent my house on Airbnb a few weekends a year. Am I covered?
Not necessarily. Many homeowners policies exclude short-term rentals unless you add an endorsement. Tell your agent and get it in writing.
Is Airbnb's AirCover real insurance?
Part of it. Host liability insurance is an insurance policy. Host damage protection is a reimbursement program, not insurance. Neither replaces your own policy for the building.
Does AirCover cover VRBO bookings?
No. AirCover only applies to stays booked through Airbnb.
Do I need a separate policy for each rental property?
It depends on the insurance company and how many properties you have. Hosts with several properties often move to a commercial policy that covers them together.
What happens if I don't tell my insurance company I rent short-term?
A claim may be denied, and the policy may be cancelled. Disclosing the rental is the most important step.
Hosting in Arkansas and not sure your policy covers it? Call City Insurance and Financial Services at (763) 582-1888 or contact us. Related reading: DP1 vs DP3 vs HO-4 and umbrella insurance for landlords.
City Insurance and Financial Services, Minnetonka, MN.
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